Bitcoin’s potential as a burgeoning safe haven alternative to gold has increased demand from institutional players in 2020. However, one prominent economist remains skeptical about the growth of the cryptocurrency.
David Rosenberg, chief strategist at Rosenberg Research & Associates in Toronto, said in an interview with Bloomberg that Bitcoin is a “massive bubble”. He criticized the flagship cryptocurrency for lacking evidence of its “future supply curve”, noting that it was just an “extremely crowded” trade.
“The only thing we know about gold is that we know the supply curve for gold for sure,” explained Rosemnberg. “We don’t know the future supply curve for Bitcoin. People think they know, but they don’t really know.”
What did Bitcoin pump?
The statements came hours after Bitcoin hit a new record high of $ 23,776 on Thursday after a breakout surpassed its psychological resistance of $ 20,000 the day before. The cryptocurrency attracted worldwide attention due to its limited delivery cap of 21 million tokens, which gave it the qualities of another scarce asset, gold.
Enthusiasts predicted Bitcoin as a hedge against inflationary fiat currency models that focused on unlimited money pressures. After the US dollar fell nearly 12 percent in global foreign exchange markets, led by the US government’s $ 2.3 trillion COVID-19 bailout package, investors took Bitcoin’s anti-fiat narrative seriously.
Bitcoin is trading above its 2017 ICO bubble. Source: BTCUSD on TradingView.com
Bitcoin is trading above its ICO bubble top of 2017. Source: BTCUSD on TradingView.com
As a result, the cost of buying a Bitcoin rose from $ 3,858 in March 2020 to $ 23,776 on Thursday. That’s a 516 percent pump. Many top analysts, including Scott Minerd, the CIO of Guggenheim Partners, forecast a BTC / USD of $ 400,000.
Mr Rosenberg has dismissed the grossly bullish call, stating that it is difficult to evaluate the value of Bitcoin.
In the meantime, the economist received a backlash from the Bitcoin community because he “did not understand” the profitability of the cryptocurrency.
“If people with so many resources, consultants, and experience still can’t understand the concepts of protocol decentralization and the need for hard forks well, we’re still good,” said one bitcoin trader. “Still a lot of upside potential.”
Another prominent economist, Nouriel Roubini, had previously criticized Bitcoin as a zero-sum game, stating that it is “the mothers and fathers of all scams”. Gold bull Peter Schiff has also been skeptical of the scarcity of the cryptocurrency, stating that anyone can copy their source code to create a twin token that makes it replicable instead of scarce.
Bitcoin enthusiasts have argued that all copycat projects will never have the same community support, led by developers and users alike.